Tax on a bond in Switzerland?

Hi,

I have a 5 year note, paying a healthy sum per month, as a resident in Switzerland, do I need to pay tax on my monthly payments which I receive ?

Thanks

What is the country of the issuer of your bond?

Short answer: yes, you’ll need to pay tax on the interests, though what you have already paid and what you can get reimbursed varies depending on what country the bond has been emitted in.

It’s a private bond in the US.

If it were in Switzerland, how would it differ ?

In Switzerland, you’d be subject to the swiss witholding tax of 35%, which would then be deducted from your regular taxes after you’ve declared it to the tax authorities.

The interests delivered by a US bond are subject to the US witholding tax of 30%, which is reduced to 15% if you file a W8-BEN form, due to the tax treatie between Switzerland and the US, provided you fulfill a small set of criteria, of which I am not sure of what they are if you have purchased this bond directly instead of through a broker. Those 15% can further be deducted from your ordinary swiss taxes by filing a DA-1 form with the swiss tax authorities, provided you pay at least 15% (marginal? I’m no expert, others can weigh in) income tax.

For more info, I’d direct you to this very well crafted @nugget’s post, for ETFs but mainly also applicable to individual securities: Tax optimisation for ETF investing

This also depends on the broker. If the broker is Swiss, then with W8-BEN filled the broker will still deduct 15% US withholding tax +15% Swiss additional withholding tax. The first gets reimbursed with the DA-1 form, the other gives you a tax credit with the RUS form if you provide all statements.

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Actually there seems to be no withholding taxes on interest distributed by US entities :person_shrugging:

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Good point, although I think there is then 30% Swiss additional withholding tax if this is a Swiss broker.

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